Preview
FILED^
1 Timothy J. Long (SBN 137591) ^NDonoro
Samuel S. Hyde (SBN 327065)
2. GREENBERG TRAURIG, LLP
1201 K Street, Suite UOO MAR ,- 6 2020
3 Sacramento, CA 95814
Telephone: 916.442.1111
4 Facsimile: 916.448.1709 By:
longt@gtlaw. com
5
Rowena Santos (SBN 210185)
6 GREENBERG TRAURIG, LLP
18565 Jamboree Road, Suite 500
7 Irvine, CA 92612
Telephone: 949.732.6500
8 Facsimile: 949.732.6501
9 Attomeys for Defendant
HEALTH NET OF CALIFORNIA, INC.
10
11 SUPERIOR COURT OF THE STATE OF CALIFORNIA
12 COUNTY OF SACRAMENTO
13 ANDREA SPEARS, an individual, on Case No. 34-2017-00210560-CU-OE-GDS
behalf of herself and on behalf of all (Consolidated with Case No. 34-2017-
14 persons similarly situated, 00216685-CU-OE-GDS)
Plaintiff,
15
HEALTH NET OF CALIFORNIA, INC.'s
16 OBJECTIONS TO PLAINTIFFS' TRIAL
HEALTH NET OF CALIFORMA, INC., a PLAN
17 Califomia Corporation; and Does 1 through Date: April 3, 2010
50, inclusive, Time: 10:00 a.m.
18 Dept: 41
Defendants. Judge: Hon. David De Alba
19
Complaint Filed: April 5, 2017
20 TOMAS R. ARANA, on behalf of himself, FAC Filed: June 29, 2017
all others similarly situated.
21
Plaintiff, Complaint Filed: August 1, 2017
22 Consolidated Complaint Filed: Decl. 21, 2017
23
HEALTH NET OF CALIFORNIA, INC., a
24 Califomia corporation; and DOES 1-50,
inclusive.
25
Defendant.
26
27
28
HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN
1 TABLE OF CONTENTS
2 I. Introduction 1
II. Procedural Backgroimd 2
3
III. ARGUMENT 4
4 A. The Trial Plan Fails To Take Into Consideration The Nuances Of The
Miscalculation Claim .....5
5
1. Was HNCA required to include the "MedFlxWave" payment in the
6 regular rate when calculating overtime? 5
2. Was HNCA required to include "ACA Incentive Payments" in the
7 regular rate when calculating overtime? 5
8 3. Was HNCA required to include "SPOT Awards" in the regular rate
when calculating overtime? '. 5
9 4. Was HNCA required to include "Wellness Incentive Payments" in
10 the regular rate when calculating overtime? 5
B. The Court Should Reject Plaintiffs' Attempt to Resurrect Their Off The
11 Clock Claim, Which The Court Refused to Certify 12
C. The Trial Plan Does Not Present A Credible Plan To Try The Meal Period
12 PAGA Claim, And Rehashes Arguments That The Court Has Already
Rejected 16
13
D. Plaintiffs' New EMPCenter Timekeeping System Off The Clock PAGA
14 Claim Is Equally Unmanageable 18
IV. Answers to Questions 1-8 of the minute order found at REGISTER OF Actions
15
#4400 20
16 V. Answers to Supplemental Case Management Conference Questionnaire for Labor
Code Private Attorney General Act of 2004 (PAGA) Cases , 22
17
18
19
20
21
22
23
24
25
26
27
28
1
HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN
1 TABLE OF AUTHORITIES
2 Page(s)
Cases
Amaral v. Cintas Corp. No. 2
163 Cal. App. 4th 1157 (2008) 8
Arias v. Superior Court,
46 Cal. 4th 969 (2009) 4
7 Augustus V. ABM Security Servs., Inc..
2 Cal. 5th 257(2016) 17
8
Barnhill v. Robert Saunders & Co.
9 125Cal. App. 3 d l (1981) , , 7
10 Bowers v. First Student, Inc.,
2015 WL 186914 (CD. Cal 2015) 10
11
22 Brinker Rest. Corp. v. Superior Court,
53 Cal. 4th 1004,1040 (2012) 17
13
Carrington v. Starbucks Corp..
14 30Cal. App. 5th, 504 (2018) 17,19
15 Cotter V. Lyft, Inc.,
193 F. Supp. 3d 1030 (N.D. Cal. 2016) 8
16
,- Cottle V. Superior Court,
3 Cal. App. 4th 1367 (1992) 20, 21
18
Duran v. U. S. Bank Nat 7 Ass 'n,
19 59 Cal. 4th 1 (2014) 4
20 Gonzales v. San Gabriel Transit, Inc.,
40 Cal. App. 5th 1131 (2019) 23, 24
Hibbs-Rines v. Seagate Techs., LLC,
22
2009 WL 513496 (N.D. Cal. Mar; 2, 2009).. 4
23
Li V. A Perfect Day Franchise, Inc.
24 2012 WL 2236752 (N.D. Cal 2012).. 8
25 Martinez v. Joe's Crab Shack Holdings,
231 Cal. App. 4th 362 (2014) 23
26
Morillion v. Royal Packing Co.,
22 Cal. 4th 575 (2000) 13, 20
28
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN
1 Payton v. Csi Electrical Contractors, Inc.,
2 27 Cal. App. 5th 832 (2018) passim
, Thurman v. Bayshore Transit Mgmt., Inc.,
203 Cal. App. 4th 1112 (2012) 8
4
Villalpando v. Exel Direct Inc.,
5 2015 WL 5179486 (N.D. Cal. Sept. 3, 2015) 7
6 Wal-Mart Stores, Inc. v. Dukes,
564 U.S. 338(2011) 4
7
Williams v. Superior Court,
8 3 Cal. 5th 531 (2017) 4,5, 17
9
Statutes
10
29 U.S.C. § 207(e)(3) 12, 23
11
29 U.S.C. § 207(e)(4) 6, 23
12
Business and Professions Code § 17200 21
13
Cal. Code Regs. 8, § 13520 (a) 7, 11
14
Labor Code § 203 7, 12
15
16 Labor Code § 2699(e)(1) and (2) ; 8
Ij Patient Protection and Affordable Care Act ; 8, 9,16,18
1g Other Authorities
19 29 C.F.R. § 778.208 10
20 29 C.F.R. § 778.211 23
21 29 C.F.R. § 778.215(a) 6
22
23
24
25
26
27
28
- Ill -
HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN
1 I. INTRODUCTION
2 One thing Plaintiffs Tomas Arana ("Arana") and Andrea Spears' ("Spears") (collectively
3 "Plaintiffs") and Defendant Health Net of Califomia ("HNCA") agree upon is that Plaintiffs bear
4 the burden of proving each and every underlying Labor Code violation allegedly suffered by each
5 and every class member and allegedly aggrieved employee, and HNCA must be afforded the
6 opportunity to present its defenses to all the claimed violations. RA 358 (Opp. To December 21
7 Spears Motion) at 1:6-8, 8:16-19, citing Hibbs-Rines v. Seagate Techs., LLC, 2009 WL 513496,
8 at *4 (N.D. Cal. Mar. 2, 2009) ("Plaintiff will have to prove Labor Code violations with respect to
9 each and every individual on whose behalf plaintiff seeks to recover civil penalties imder
10 PAGA"). Moreover, it is Plaintiffs' burden to develop and present a Trial Presentation and
11 Management Plan ("Trial Plan") that will permit the fair, just, expeditious, and manageable
12 adjudication of the remaining claims in this lawsuit. See, e.g., Payton v. Csi Electrical
13 Contractors, Inc., 27 Cal. App. 5th 832, 843-45 (2018). Against this backdrop. Plaintiffs' trial
14 plan is at best folly, and at worst an effort to mislead this Court. RA 481 (Trial Plan).' That a
15 trial on the remaining claims involving 5,600 allegedly aggrieved employees could be completed
16 in four or five court days is nonsense. For example, to prove just one instance where one
17 individual would be entitled to recover for off-the-clock work. Plaintiffs will have to prove that
18 the individual was engaged in compensable work and that HNCA knew or should have known
19 that compensable work was being performed. RA 372 (HNCA's Opp. To Motion for Class Cert.)
20 at 16:20-25, citing Morillion v. Royal Packing Co., 22 Cal. 4th 575, 585 (2000). Multiply that
21 showing by 5,600 over what is now nearly a six-year recovery period and it is plain that trying
22 just this claim alone will take far longer than four or five days.
23 The proposed Trial Plan lacks the detail and rigor required to establish that Plaintiffs have
24 a plan to try the remaining issues in a manner that the law requires. See, e.g., Payton, 27 Cal.
25
2g ' Throughout this Opposition, citation to previous filings reference the Register of Actions ("RA") number. Citations
to HNCA's Motion to Strike Arana's Representative PAGA Allegations ("Arana Motion to Strike") and Motion to
2y Strike Spears' Representative PAGA Allegations ("Spears Motion to Strike"),filedconcurrentiy herewith, reference
the pages of the respective motions. All cited deposition exhibits and transcript pages and declaration not otherwise
designated by RA number are attached as exhibits ("Ex.") to the Declaration of Tim Long ("Long Decl."), filed
concurrently herewith.
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN
1 App. 5th at 843-45. (trial court properly rejected a proposed trial plan where the plan did not
2 contain any explanation of specific procedural tools to ensure it was valid and rigorous, nor any
3 basis for the fact-finder to move from quantities of data to conclusions about liability to class, and
4 did not show how individualized issues arisingfiromemployer's defenses could be managed).
5 Both the law and this Court's order require more than general statements conceming how
6 Plaintiffs intends to move forward. Id. For example, it is not enough to simply reference wage
7 statements, summary plan descriptions, and "6 witnesses (consisting of 2 Plaintiffs, 3 [of]
8 Defendant's Persons Most Knowledgeable, 1 expert damages witness" without any meaningful
9 discussion, (RA 481 (Trial Plan) at 7:6-7) when explaining how one intends to prove an off-the-
10 clock claim involving thousands of allegedly aggrieved employees.
11 The deficiencies of the Trial Plan are also exposed when one considers the renewed Arana
12 and Spears Motions to Strike HNCA has filed concurrently with these objections. HNCA will not
13 repeat those arguments here, but this brief should be read in conjimction with those motions.
14 Finally, the Trial Plan is also remarkable in two other respects. First, Plaintiffs are
15 essentially asking this Court to ignore that it did not certify the off-the-clock claim they propose
16 to try. RA 439 (August 30, 2019 Minute Order) at 4, 5-6; RA 481 at 0:16-1:14, 7:24-8:26.
17 Rather the Court certified a single question for class treatment. RA 439 at 4, 5-6 ("...[F]or the
18 difference between actual start and recorded start.. .there is an issue about the off the clock work
19 that can be resolved on a class wide basis: Did the time recording systems in effect during the
20 relevant periods prevent an accurate capture of the start time of the class members?... [EJxcept [as
21 to the resolution of this factual issue], ... the request to certify the off-the-clock claims is
22 denied.") Second, Plaintiffs are attempting to litigate two new PAGA claims: a Meal Period and
23 "EMPCenter" Claim never before presented in this case, including in their LWDA Notices. But
24 whether old, new, or made up. Plaintiffs have not articulated a Trial Plan that passes muster.
25 II. PROCEDURAL BACKGROUND
26 While Plaintiffs' Consolidated Complaint (RA 66), and their respective LWDA Notices^
27
^ RA 318 (Long Decl. ISO Motion as to Why Spears' Case Should Not Proceed as a PAGA Representative Action),
28 3, Ex. C, and RA 320 (Grimson Decl. ISO of Motion as to Why Arana's Case Should Not Proceed as a PAGA
Representative Action), ^ 3, Ex. A.
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRLVL PLAN
1 mention a number of claims. Plaintiffs have clarified that they only intend to proceed with four:
^ 1. Miscalculation Claim. According to Plaintiffs, this claim "subsumes" the
Miscalculation Class and PAGA claims. Plaintiffs claim that HNCA should have
3
included "MedFlxWave" payments, "DenFlxWave" payments, SPOT Awards,
4 ACA Incentive payments and/or Wellness Incentive payments in the regular rate
when calculating overtime. Plaintiffs seek to recover unpaid overtime and PAGA
5 penalties, as \yell as wage statement and waiting-time penalties. RA 481 at 0:19-21,
0:26-1:7, 1:21-27, 6:5-7:4.
6
^ 2. Off the Clock Claim. According to Plaintiffs, this claim "subsumes" an off
the clock class claim and PAGA claims. Plaintiffs' theory of liability for this claim
8 is that HNCA failed to properly account for and/or record the hours worked by
employees for all the time spent booting up their computers and logging in.
9 Plaintiffs seek to recover unpaid overtime and straight-time pay, PAGA penalties,
as well as wage statement and waiting-time penalties. RA 481 at 1:21-27, 7:25-
10 8:26.
3. Meal Period Premium PAGA Claim. Plaintiffs'theory of liability for this
j2 claim is that HNCA failed to advise the employees to use the pay code "DTO" for
payment of meal period premiums, which resulted in numerous unpaid meal period
13 premiums between April 5, 2016 to December 31, 2016. Plaintiffs seek to recover
meal period premiums, PAGA penalties, as well as wage statement and waiting-
14 time penalties. RA 481 at 1:21-27, 9:18-27.
^5 4. EMPCenter Timekeeping System Off the Clock PAGA Claim. The
theory of liability for this claim is that HNCA failed to advise employees that they
could manually enter their start and stop times in the EMPCenter timekeeping
17 system, which resulted in employees not being paid for all hours worked beginning
January 1, 2017 to the present. Plaintiffs seek to recover unpaid overtime and
18 straight-time pay, PAGA penalties, as well as wage statement and waiting-time
penalties. RA 481 at 1:21-27,11:9-22.
2Q All other claims set forth in Plaintiffs' Consolidated Complaint have otherwise been dismissed or
abandoned ~ i.e.. Plaintiffs' rest break claims. RA 66, 481.
22 As pointed out in the companion Arana and Spears Motions to Strike, each one of these
23 claims is unmanageable, and the Trial Plan only imderscores this conclusion. It also bears
24 repeating that the Court declined to certify the off the clock claim (Claim No. 2) Plaintiffs are
25 seeking to pursue. Rather, the Court only certified a single issue, and Plaintiffs fail to mention
2g that issue in their Trial Plan. Finally, Plaintiffs' third and fourth claims should be stricken for a
2^ number of reasons, not the least of which is that they failed to exhaust the administrative process
2g before trying to pursue these claims in court at this late date.
-3-
. HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN
1 HNCA will discuss each claim below, summarizing its objections to the proposed
2 Plaintiffs' plan (such as it is) to try each claim. HNCA will also provide a reality check as to each
3 claim, which will demonstrate that the Trial Plan is wholly deficient - and should lead this Court
4 to strike all the claims remaining in this case. Finally, HNCA will provide its responses to the
5 questions the Court has asked the parties to answer.
6 III. ARGUMENT
7 Recovery under the PAGA is predicated on a plaintiff first establishing that the defendant
8 violated the Labor Code. See Arias v. Superior Court, 46 Cal. 4tii 969, 987 (2009). Critically, in
9 order to prevail on PAGA claims, plaintiffs must prove each and every violation with regard to
10 each and every allegedly aggrieved employee on whose behalf they seek to recover PAGA
11 penalties. RA 358 (Oppo. to December 21 Spears Mtn.) at 8:12-28, 9:1-2, citing Zayers v.
12 Kiewit Infrastructure W. Co., 2017 WL 7058141, at *8 (CD. Cal. Nov. 9, 2017), and Hibbs-
13 Rines, 2009 WL 513496, at *4. Thus, Plaintiffs must prove each alleged Labor Code violation not
14 only for themselves but for each allegedly aggrieved employee that the Plaintiffs purportedly
15 represent. See Williams v. Superior Court, 3 Cal. 5th 531, 547-48 (2017), citing Sakkab v.
16 Luxottica Retail NAm., Inc., 802 F.3d 425, 438 (9th Cir. 2015). Moreover, HNCA is entitied to
17 challenge each and every one of the more than 5,600 allegedly aggrieved employees' right to
18 recovery. Both the United States and Califomia Supreme Courts recognize HNCA's due process
19 right to do so. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 366 (2011); Duran v. U.S Bank
20 Nat'lAss'n, 59 Cai. 4ih 1,29 (2014).
21 In proving each PAGA claim. Plaintiffs must also explain to the Court how they will do
22 so efficientiy and in a manner that is manageable - z. e., without a trial devolving into thousands
23 of mini-trials and individualized disputes. Plaintiffs bear the burden of demonstrating
24 manageability. See, e.g., Payton, 27 Cal. App. 5 that 843-45 (trial court properly rejected a
25 proposed trial plan where the plan did not contain any explanation of specific procedural tools to
26 ensure it was valid and rigorous, nor any basis for the fact-finder to move from quantities of data
27 to conclusions about liability to class, and did not show how individualized issues arising from
28 employer's defenses could be managed). The Califomia Supreme Court recently confirmed this
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN
1 requirement, when it discussed how a plaintiff bringing a PAGA representative action must "seek
2 to render trial of the action manageable." Williams, 3 Cal. 5th at 559.
3 As set forth below. Plaintiffs fail to demonstrate in their Trial Plan how any of their claims
4 can be tried in a manageable fashion.
5 A. The Trial Plan Fails To Take Into Consideration The Nuances Of The
Miscalculation Claim
6
This claim is actually comprised of five separate claims:
7 „
Was HNCA required to include the "MedFlxWave" payment in the regular rate when
8 calculating overtime?
9 • Was HNCA required to include the "DenFlxWave" payment in the regular rate 3. when
calculating overtime?
10
Was HNCA required to include "ACA Incentive Payments" in the regular rate when
11 calculating overtime?
12 • Was HNCA required to include "SPOT Awards" in the regular rate when calculating
overtime?
13
Was HNCA required to include "Wellness Incentive Payments" in the regular rate when
14 calculating overtime?
15 The first two claims are related. The others are not, and each involves separate factual
16 imderpinnings. As a result, the testimony and documentary evidence conceming these claims, not
17 to mention evidence supporting Plamtiffs' alleged wage losses and right to recover penalties, will
18 be distinct and complex.
19 1. The Trial of The MedFlxWave And DenFlxWave Payments WiU Involve A
Potentially Complex Presentation Of Evidence Requiring The Interpretation Of
20 A Multi-pronged Regulation
21 The first two claims conceming MedFlxWave and DenFlxWave payments involve
22 payments that HNCA employees received pursuant to a cafeteria benefits plan that was in effect
23 prior to January 1, 2017. If an employee waived their right to medical or dental benefits
24 (because, for example, they were covered tmder a spouse's plan), then the employees would
25 receive a small payment firom the plan, a $20 MedFlxWave payment every pay period and/or a $6
26 DenFlx Wave Payment every pay period. RA 103 (Rodes Deck, ^ 7; Colia Deck, TITj 10, 11, Exs.
27 A-I). Whether HNCA was required to include these payments in the regular rate when
28 calculating overtime depends on the application of what is known as the Cash Benefit-Plan
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN
1 Contiibution Exemption ("Cash Benefit Exemption"). See 29 U.S.C. § 207(e)(4). Under tiiis
2 exemption, if the following five elements are satisfied, then HNCA was not required to include
3 the MedFlxWave and DenFlxWave payments in the regular rate. Those five elements are:
4
(1) The contributions must be made pursuant to a specific plan or program adopted by the
5 employer . . . and communicated to tiie employees. This may be either a company-
financed plan or an employer-employee contributory plan.
6
(2) The primary purpose of the plan must be to provide systematically for the payment of
1 benefits to employees on account of death, disability, advanced age, retirement^ illness,
^ medical expenses, hospitalization, and the like.
(3) In a plan or tmst... [t]he benefits must be specified or definitely determinable on an
9 actuarial basis . . . .
10 (4) The employer's contributions must be paid irrevocably to a trustee or third person
pursuant to an insurance agreement, tmst or other funded arrangement. The tmstee must
11 assume the usual fiduciary responsibilities imposed upon tmstees by applicable law. The
tmst or fimd must be set up in such a way that in no event will the employer be able to
12 recapture any of the contributions paid in nor in any way divert the fiinds to his own use
or benefit....
13
(5) The plan must not give an employee the right to assign his benefits tmder the plan nor
14 the option to receive any part of the employer's contributions in cash instead of the
benefits under the plan: Provided, however. That if a plan otherwise qualified as a bona
15 fide benefit plan under section 7(e)(4) of the Act, it will still be regarded as a bona fide
plan even though it provides, as an incidental part thereof, for the payment to an employee
16 in cash of all or a part of the amount standing to his credit... during the course of his
employment under circumstances specified in the plan and not inconsistent with the
17 general purposes of the plan to provide the benefits described in section 7(e)(4) of the
Act.
18
19 29 C.F.R. § 778.215(a); see also RA 282 (Renewed MSA) at 15:3-28. HNCA contends tiiat tiie
20 Cash Benefit Exemption applies and that it was not required to include the MedFlxWave and
21 DenFlxWave payments in the regular rate.
22 To resolve these two claims, the Court will first have to consider live testimony from a
23 number of witnesses, most of whom Plaintiffs have not deposed, who will testify conceming the
24 stmcture of the cafeteria benefit plan at issue, including potentially relevant amendments to that
25 plan. HNCA witnesses will also testify conceming the administration of that cafeteria benefits
26 plan. Finally, HNCA witnesses will testify conceming how these payments were made, which
27 will include testimony conceming the payroll system in place at the time. This evidentiary
28 showing will be comprised of lay and expert witnesses, as well as substantial documentary
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRLVL PLAN
1 evidence.^ At this time, HNCA estimates that it will present up to ten witnesses on these two
2 claims alone.
3 Assuming the Court were to find that the Cash Benefit Exemption does not apply, the
4 Court will have to consider testimony conceming the alleged wage loss and the penalties
5 Plaintiffs seek to recover. As to wage loss, this will require a pay-period-by-pay-period analysis
6 of each wage statement for each employee to determine who received a MedFlxWave and/or
7 DenFlxWave payment, and whether the employee was entitied to overtime. This effort will be
8 further complicated because while pay periods are be-weekly, overtime must be determined on a
9 daily and weekly basis for each employee who received either a MedFlxWave and/or
10 DenFlxWave payment. Only then can one calculate whether there has been a wage loss. This
11 will be complex and time-consuming.
12 Plaintiffs report that they will provide testimony from an undisclosed damages expert (RA
13 481 (Trial Plan) at 7:7), but they fail to explain the nature of this testimony or the methodology
14 their expert will use. ^ HNCA and the Court are only left to guess. Up to this point in the
15 litigation. Plaintiffs have not designated an expert for these claims, or provided any expert
16 analysis of these claims. While Plaintiffs were required to discuss specifically how these claims
17 would be tiied {See Payton, 27 Cal. App. 5* at 843-45) tiiey have failed to do so.
18 For its part, HNCA will present live testimony from at least one expert on the alleged
19 wage loss and penalties Plaintiffs are seeking. In addition, HNCA will introduce testimony
20 targeting the right to recover some or all of the penalties Plaintiffs seek to recover. For example,
21 whether Plaintiffs will be entitled to recover waiting-time penalties under Labor Code section 203
22 will depend on whether HNCA proves up its good faith defense to such penalties. See Cal. Code
23 of Regs. tit. 8, §13250; see also Villalpando v. Exel Direct Inc., 2015 WL 5179486, at *36 (N.D.
24 Cal. Sept. 3, 2015). That defense will require the Court to consider whether there is a "good faith
25 dispute" that any .wages are due. Cal. Code Regs. tit. 8, § 13520 (a); see also Barnhill v. Robert
26
27 ^ HNCA proposes that any trial on these claims be bifurcated between liability and damages. If the Cash Benefit
Exemption applies, then there is no wage loss or right to penalties.
28 ^ And if Plaintiffs try to rely upon expert testimony akin to the expert testimony they submitted in their failed attempt
at class certification, HNCA will no doubtfilea Daubert-Vikt motion challenging Plaintiffs' expert.
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN
1 Saunders & Co., 125 Cal. App. 3d 1, 8 (1981). As for the PAGA penalties Plaintiffs are seeking,
2 HNCA will offer testimony based on which the Court will exercise its equitable powers in
3 determining what amount of PAGA penalties to award. Labor Code § 2699(e)(1) and (2) (when a
4 civil penalty is imposed under PAGA, the Court has the discretion to set the amount, taking into
5 consideration all "facts and circumstances of the particular case" to avoid "an award that is
6 unjust, arbitrary and oppressive, or confiscatory"); Thurman v. Bayshore Transit Mgmt, Inc., 203
7 Cal. App. 4th 1112, 1136 (2012) (a reduction of PAGA penalties is appropriate when the
8 employer had taken its obligations seriously and attempted to comply with the law); Amaral v.
9 Cintas Corp. No. 2 163 Cal. App. 4th 1157, 1214 (2008) (an important consideration is whether
10 the penalty is proportionate to the employer's misconduct); Cotter v. Lyft, Inc., 193 F. Supp. 3d
11 1030, 1037 (N.D. Cal. 2016) (indicating tiiat a "substantial" reduction would likely be in order
12 since, among other things, the company's "obligations ... are genuinely unclear"); Li v. A Perfect
13 Day Franchise, Inc. 2012 WL 2236752 * 17 (N.D. Cal 2012) (considering duplicity when
14 imposing penalties).^ The testimony conceming these alleged penalties will necessarily be
15 focused on the underlying MedFlxWave and DenFlxWave claims, and will be distinct from other
16 testimony focusing on Plaintiffs' right to recover penalties for other alleged claims.
17 Plaintiffs' Trial Plan does not take into accoimt any of the details associated with this
18 claim and certainly doesn't propose an efficient process for adjudicating the issue of exemption,
19 as well as the determination of wage loss and penalties. When considered along with the other
20 claims. Plaintiffs seek to try, and then completely associated with just these two claims, it should
21 be apparent that Plaintiffs'Trial Plan is deficient.
2. HNCA Included ACA Incentive Payments In The Regular Rate
23
Before January 1, 2017, a number of HNCA employees eamed ACA Incentive Payments
when they voluntarily worked overtime due to an increase in their workloads caused by the
25
implementation of the Patient Protection and Affordable Care Act. RA 103 (Rodes Deck, ^ 19,
26
27 ^ As discussed fiirther below, if there is a fmding of liability on any of the other claims Plaintiffs seek to try, HNCA
will also be entitied to introduce similar evidence in its defense against Plaintiffs' efforts to seek similar penalties.
28 Such evidence will be particular to each unique claim upon which liability is found. HNCA proposes that for each
claim, the trial should be bifurcated as to liability and damages (wage loss and/or penalties).
-8-
HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN
1 Ex. F.) Specifically, under the ACA Incentive Plan, eligible employees who worked a certain
2 number of overtime hours each month received bonus payments. Id. These payments were
3 included in recipients' regular rate of pay. RA 103 (Rodes Deck, 20-21, Ex. G); see also RA
4 101 (MSA) at 5:8-15. At this jtmcture HNCA estimates that hundreds of individuals eamed ACA
5 Incentive Payments.
6 As Plaintiffs should know by now, HNCA included these payments in the regular rate
7 when it calculated overtime. RA 103 (Rodes Deck, 19-21, Exs. F,G.) Assuming that Plaintiffs
8 go forward with this claim, HNCA will present witness testimony conceming the ACA Incentive
9 Payments themselves, the criteria for eaming the ACA Incentive Payments, when the ACA
10 Incentive Payments were provided and the accoimting of the ACA Incentive Payments for each
11 pay period and for each employee who eamed the ACA Incentive Payments to prove that the
12 ACA Incentive Payments were included in the regular rate. This will involve a number of
13 witnesses and require a pay-period-by-pay-period analysis of each wage statement for each
14 employee who eamed an ACA Incentive Payment. As with the MedFlxWave and DenFlxWave
15 claims, this analysis is fiirther complicated because one has to break down the bi-weekly wage
16 statements in daily and weekly components to determine whether (and when) overtime was
17 worked and to confirm that the overtime was properly calculated to include these payments.
18 HNCA will not be presenting this testimony on a representative or survey basis.
19 Plaintiffs' Trial Plan ignores all of the complexities, as well as, HNCA's due process right
20 to present witnesses and documentary evidence necessary to prove its defense, i.e. that this
21 payment was included in the regular rate of pay for each allegedly aggrieved employee for each
22 workweek at issue. A more efficient process for trying this claim does not exist. The process is
23 interestingly individualized and time-consuming.
3. The Determination of Whether SPOT Awards Were Discretionary Bonuses That
25 Did Not Need To Be Included In The Regular Rate Will Require Individualized
Analyses
26
Significant manageability issues exist in connection with a trial of the SPOT Award
27
Claim. While HNCA moved for summary adjudication of this claim as to each Plaintiff, the court
28
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRLVL PLAN
1 considered tiiey wereti-iableissues of fact. RA 272 (October 23, 2018 Minute Order); RA 374
2 (Febmary 26, 2019). Taking that guidance from the Court, it is apparent that the Court implicitly
3 agrees that this claim will require fact-specific and individualized determinations, involving each
4 and every SPOT Award recipient. Yet Plaintiffs Trial Plan does not accoimt for any ofthe
5 complexities.
6 The crux of this claim involves determining whether each SPOT Award payment was a
7 discretionary bonus. If a Spot Award payment was discretionary, it would not be included in the
8 regular rate and Plaintiffs' claim would fail as to that SPOT Award recipient. 29 C.F.R. §
9 778.208. See also Bowers v. First Student, Inc., 2015 WL 186914 at *3-4 (CD. Cal 2015). And
10 as evidence by the mechanics of the SPOT Award process, this determination will have to be
11 made for each and every SPOT Award, each and every time it will be paid out.
12 SPOT Awards were paid when an employee "demonsfrate[d] exceptional behavior on the
13 job . . . whether it [wa]s within or beyond [the employee's] job scope." RA 103 (Rodes Deck, ^
14 13, Ex. C.) Employees were aware that bonuses were awarded without any promise or incentive
15 being announced beforehand. Id. Indeed, there were no pre-estabHshed criteria for awarding
16 SPOT bonuses or pre-established amounts to be awarded. RA 103 (Rodes Deck, 1}^ 13-14, Ex.
17 C.) Rather, the decision of when, for what reason, and in what amount to award a SPOT bonus -
18 within a range - was subject to the discretion of managers and fhe ultimate approval of the head of
19 tiie appropriate Business Unit. RA 103 (Rodes Deck, 13-17, Exs. C, D.) Deck, Procedurally,
20 a SPOT bonus was initiated if a manager felt that an employee on his or her team should receive
21 one. RA 103 (Rodes Deck, 13, 16, Ex. C.) The manager had the discretion to complete the
22 SPOT Award Nomination Form detailing the reason for nomination, describing the achievement,
23 and identifying a specific amount he or she believed appropriate. RA 103 (Rodes Deck, 13-14,
24 16, Exs. C, D.) The manager would then submit the form to the head of his or her Business Unit.
25 . JRA 103 (Rodes Deck, ^ 16.) The Business Unit Leader then exercised his or her discretion as to
26 whether to award the SPOT bonus based on the manager's recommendation (or not) and, if so, in
27 what amount. RA 103 (Rodes Deck, ^ 17.) These were, therefore, two levels of decision-making
28 the Court will have to evaluate each time a SPOT Award payment was made. SPOT bonuses
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN
1 were not included in recipients' regular rate calculation. RA 103 (Rodes Deck, Tf^f 17-18, Ex. E.)
2 Obviously, Plaintiffs believe that the SPOT Awards were in fact non-discretionary bonuses and
3 should have been included in the regular rate.
4 During a trial on this claim, the parties will have to litigate each and every SPOT Award
5 granted in order to establish the nature of each and every award payment - i.e., that in fact each
6 SPOT Award was granted on a discretionary basis. This will necessarily include testimony from
7 many witnesses because HNCA estimates that hundreds, if not thousands, of SPOT Awards were
8 granted during the class period. This evidence will necessarily include the factors that each and
9 every manager who granted such an award considered when making a SPOT Award, when the
10 SPOT Awards were provided and the accounting ofthe SPOT Awards for each and every
11 applicable pay period and for each and every employee who eamed the SPOT Awards.
12 The inquiry will not end there. As pointed out above, if the Courtfindsthat any SPOT
13 Award will in fact be a non-discretionary payment, the Court will then tum its attention to the
14 wage loss and penalties Plaintiffs are seeking HNCA must then be permitted to infroduce
15 evidence that the amount of penalties being sought should be small (in the case of PAGA
16 penalties) and/or not awarded because HNCA acted in good faith (in the case of waiting-time
17 penalties). The latter showing will necessarily involve testimony conceming each SPOT Award
18 granted to demonsfrate that HNCA had a good faith basis for believing that the SPOT Award was
19 discretionary. See Cal. Code Regs. tit. 8, § 13520 (a); see also discussion infra § III.A.l. above.
20 Needless to say, this evidentiary showing will be lengthy, fact-intensive, and individualized.
21 And as with the other claims. Plaintiffs Trial Plan does not account for the nuances of this
22 claim, including offering an expeditious and manageable plan for trying the issues associated with
23 this claim. Presumably, this is because Plaintiffs implicitly concede that the issues associated
24 with this claim are individualized and unmanageable, particularly when considered with the other
25 claims Plaintiffs seek to try.
26 4. "Wellness Incentive Payments" Did Not Need to be Included in The Regular Rate
27 Prior to January 1, 2017, HNCA provided Wellness Incentive Payments to employees for
28 participating in a health club and/or weight management program. Because these were not
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN
1 payments designed to compensate employees for hours worked, they were excludable from the
2 regular rate.^ See 29 U.S.C. § 207(e)(3).
3 If this claim goes to trial, HNCA will present witness testimony conceming the purpose of
4 the Wellness Incentive policy and payment program. Under this program, employees had to
5 submit evidence that they qualified for these payments. Therefore, the parties will necessarily
6 need to evaluate whether each and every recipient actually qualified for this payment.^
7 If the Court were to determine that the Wellness Incentive Payment should have been
8 included in the regular rate when calculating overtime, the analysis will then turn to proving wage
9 loss and a basis for recovering PAGA penalties and the other derivative penalties, including
10 waiting-time penalties under Labor Code section 203. As with the other claims that comprise this
11 Miscalculation Claim, this testimony will be a mix of expert and lay witness testimony, and will
12 necessarily involve a payment-by-payment analysis, on a pay period-by-pay period, employee-
13 by-employee basis. There is simply no way around working through fact-intensive and
14 individualized nature of this claim. Certainly, Plaintiffs have not offered any.
15 B. The Court Should Reject Plaintiffs' Attempt to Resurrect Their Off The
Clock Claim. Which The Court Refused to Certify
16
In their Trial Plan, Plaintiffs propose trying an off-the-clock class claim in addition to an
17
off-the-clock PAGA claim. RA 481 (Trial Plan) at 7:25-26. However, and as the Court knows, it
18
refiised to certify Plaintiffs' requested Off the Clock Claims, with a limited exception of an issue
19
class, which was linked to a single question. RA 439 (August 30, 2019 Minute Order). The Court
20
mled in relevant part as follows:
21
...[T]he Court does not find a well-defmed community of interest on each [of
22
Plaintiffs' off-the clock work, rneal periods and rest periods] claim[s], because it
23 carmot be found on this record that the issues which may be jointiy tried on each
claim, when compared with those appearing by the evidence to require separate
24 individualized adjudication, are so numerous or substantial that the maintenance of
a class action would be advantageous to the judicial process and to putative class.
25
26 ^ In light of new federal Department of Labor ("DOL") regulations that came into effect earlier this year, HNCA
27 intends to file a motion for summary adjudication as to this claim.
' Interestingly, neither Plaintiff received one of these payments, so they are not competent to present any evidence as
28 to this claim. This is in part why HNCA has challenged Plaintiffs' right to recover PAGA penalties based on this
claim.
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN
1 RA 439 at 4. The Court then sua sponte certified the following issue for class treatment: "[d]id
2 the time recording system in effect during the relevant periods prevent an accurate capture of the
3 starttimeof the class members?" RA 439 at pp. 5-6. Plaintiffs apparentiy forgot about this mling
4 when designing their Trial Plan, including failing to mention how they propose to try this one
5 issue identified by the Court for class treatment.
6 For its part, HNCA intends to file a motion for summary adjudication on this issue.
7 Should for some reason that motion not be granted, HNCA will move to decertify it. The reason
8 that summary adjudication is warranted is because the answer to the question is "No¥es."
9 Indeed, there is ample undisputed evidence in the record leading to this conclusion. In the
10 altemative, HNCA will move to decertify the claim. ^
11 Should this issue proceed to trial on a certified basis notwithstanding HNCA's motions,
12 any trial on this claim will undoubtedly devolve into a myriad of individualized issues. This is
13 because how the timekeeping system functioned begins then quits as to whether any class
14 member will be engaging in off-the-clock work and whether HNCA was obligated to pay for that
15 work. If the applicable time recording system in effect during the relevant period prevented an
16 accurate capture of the start time of the class members (which it did not). Plaintiffs will still be
17 required to come forward with evidence to prove that in each instance when off-the-clock work is
18 claimed, each class member was engaged in compensable work. Morillion, 22 Cal. 4th at 585.
19 Plaintiffs will then need to prove that in each instance, HNCA knew or should have known that
20 the class members were engaged in compensable work. Id. Whether the off-clock claim is
21 stylized as the class claim Plaintiffs now seek to pursue, on that is pursued after thefimctioningof
22 the timekeeping system is finally confirmed, or as a PAGA claim, there should be no doubt that
23 the trial on this issue will breakdown into thousands of individualized mini-trials.^
24
25
26 8 From a procedural perspective the certified issue presents an interesting legal question. Plaintiffs did not move to
certify this issue and did not even mention it in their certification papers. It was the Court that crafted this issue, and
27 then certified it. The Court did so without affording HNCA the opportunity to brief the issue. There should be no
procedural bar to HNCA demonstrating why this question should not have been certified in the first instance.
28 ' And for this reason the Court refused to certify the off-the-clock claim the Plaintiffs tried to certify in the first
instance.
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRLVL PLAN
1 Consider for example Plaintiffs PAGA claims and what Plaintiffs will have to prove to
2 recover PAGA penalties. For the employees working in call centers and they represent only one
3 segment of the employees whom Plaintiffs are seeking to prove worked off the clock, there are
4 potentially significant factual differences that would impact whether employees ever worked off
5 the clock, under what circumstances such work occurred, and whether HNCA had reason to know
6 that work occurred. RA 329 (Rodes Deck, |6; RA 325 (Summary of Evidence - Factual
7 Statement ("FS"), 1). As the Court knows, one of Plaintiffs' theories of recovery is that
8 employees experienced delays when logging into their computers. However, many call center
9 employees experienced virtually no delays with their log-in process, and thus did not work off-
10 the-clock as the result of supposed log-in delays. RA 325 (FS 10). By confrast, Maria Castaneda,
11 who works as a Concurrent Review Lead in the Concurrent Review Unit of the Medical
12 Management Department in Woodland Hills, has reported a different experience. RA 317, Tab 8
13 (Decl. of Maria Castaneda ^ 1). It takes Ms. Castaneda a matter of seconds to open and close her
14 computer program; likewise, the process for her to record her time in the web-based EMPCenter
15 program takes mere seconds. M 8, 18. Tracy Raitt, a Project Coordinator in the Case
16 Management Department in Woodland Hills, reports that it takes here a few minutes to log out of
17 the system. RA 317, Tab 32 (Declaration of Tract Raitt | ^ 1,18). Ms. Raitt previously manually
18 recorded her time, and now uses an elecfronic system to do so. Id. 16,17. Yet regardless of
19 which system she has used tofrackher time, Ms. Raitt never worked off the clock or worked
20 hours she has not reported. Id.\\9.
21 The resolution of these issues as to one individual employee in no way represents or could
22 be exfrapolated to the experience of any other employee. During the relevant time period,
23 employees worked in approximately 352 different job titles, at 26 different locations, under
24 approximately 526 different managers. RA 329 (Rodes Decl.) 5. For Plaintiffs to meet their
25 burden of proving each individual off-the-clock violation for which they seek penalties under the
26 PAGA, the Court would have to conduct mini-trials for all 5,600 employees to determine whether
27 and when that particular employee worked off the clock, as well as whether management had
28 reason to know that employee had worked without pay. Thus, not only is the proof necessary to
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HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN
1 establish that the allegedly aggrieved employees worked off-the-clock highly individualized but
2 establishing HNCA's liability for this claim necessarily involves complex factual issues and poses
3 significant manage
Preview
FILED^ 1 Timothy J. Long (SBN 137591) ^NDonoro Samuel S. Hyde (SBN 327065) 2. GREENBERG TRAURIG, LLP 1201 K Street, Suite UOO MAR ,- 6 2020 3 Sacramento, CA 95814 Telephone: 916.442.1111 4 Facsimile: 916.448.1709 By: longt@gtlaw. com 5 Rowena Santos (SBN 210185) 6 GREENBERG TRAURIG, LLP 18565 Jamboree Road, Suite 500 7 Irvine, CA 92612 Telephone: 949.732.6500 8 Facsimile: 949.732.6501 9 Attomeys for Defendant HEALTH NET OF CALIFORNIA, INC. 10 11 SUPERIOR COURT OF THE STATE OF CALIFORNIA 12 COUNTY OF SACRAMENTO 13 ANDREA SPEARS, an individual, on Case No. 34-2017-00210560-CU-OE-GDS behalf of herself and on behalf of all (Consolidated with Case No. 34-2017- 14 persons similarly situated, 00216685-CU-OE-GDS) Plaintiff, 15 HEALTH NET OF CALIFORNIA, INC.'s 16 OBJECTIONS TO PLAINTIFFS' TRIAL HEALTH NET OF CALIFORMA, INC., a PLAN 17 Califomia Corporation; and Does 1 through Date: April 3, 2010 50, inclusive, Time: 10:00 a.m. 18 Dept: 41 Defendants. Judge: Hon. David De Alba 19 Complaint Filed: April 5, 2017 20 TOMAS R. ARANA, on behalf of himself, FAC Filed: June 29, 2017 all others similarly situated. 21 Plaintiff, Complaint Filed: August 1, 2017 22 Consolidated Complaint Filed: Decl. 21, 2017 23 HEALTH NET OF CALIFORNIA, INC., a 24 Califomia corporation; and DOES 1-50, inclusive. 25 Defendant. 26 27 28 HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN 1 TABLE OF CONTENTS 2 I. Introduction 1 II. Procedural Backgroimd 2 3 III. ARGUMENT 4 4 A. The Trial Plan Fails To Take Into Consideration The Nuances Of The Miscalculation Claim .....5 5 1. Was HNCA required to include the "MedFlxWave" payment in the 6 regular rate when calculating overtime? 5 2. Was HNCA required to include "ACA Incentive Payments" in the 7 regular rate when calculating overtime? 5 8 3. Was HNCA required to include "SPOT Awards" in the regular rate when calculating overtime? '. 5 9 4. Was HNCA required to include "Wellness Incentive Payments" in 10 the regular rate when calculating overtime? 5 B. The Court Should Reject Plaintiffs' Attempt to Resurrect Their Off The 11 Clock Claim, Which The Court Refused to Certify 12 C. The Trial Plan Does Not Present A Credible Plan To Try The Meal Period 12 PAGA Claim, And Rehashes Arguments That The Court Has Already Rejected 16 13 D. Plaintiffs' New EMPCenter Timekeeping System Off The Clock PAGA 14 Claim Is Equally Unmanageable 18 IV. Answers to Questions 1-8 of the minute order found at REGISTER OF Actions 15 #4400 20 16 V. Answers to Supplemental Case Management Conference Questionnaire for Labor Code Private Attorney General Act of 2004 (PAGA) Cases , 22 17 18 19 20 21 22 23 24 25 26 27 28 1 HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN 1 TABLE OF AUTHORITIES 2 Page(s) Cases Amaral v. Cintas Corp. No. 2 163 Cal. App. 4th 1157 (2008) 8 Arias v. Superior Court, 46 Cal. 4th 969 (2009) 4 7 Augustus V. ABM Security Servs., Inc.. 2 Cal. 5th 257(2016) 17 8 Barnhill v. Robert Saunders & Co. 9 125Cal. App. 3 d l (1981) , , 7 10 Bowers v. First Student, Inc., 2015 WL 186914 (CD. Cal 2015) 10 11 22 Brinker Rest. Corp. v. Superior Court, 53 Cal. 4th 1004,1040 (2012) 17 13 Carrington v. Starbucks Corp.. 14 30Cal. App. 5th, 504 (2018) 17,19 15 Cotter V. Lyft, Inc., 193 F. Supp. 3d 1030 (N.D. Cal. 2016) 8 16 ,- Cottle V. Superior Court, 3 Cal. App. 4th 1367 (1992) 20, 21 18 Duran v. U. S. Bank Nat 7 Ass 'n, 19 59 Cal. 4th 1 (2014) 4 20 Gonzales v. San Gabriel Transit, Inc., 40 Cal. App. 5th 1131 (2019) 23, 24 Hibbs-Rines v. Seagate Techs., LLC, 22 2009 WL 513496 (N.D. Cal. Mar; 2, 2009).. 4 23 Li V. A Perfect Day Franchise, Inc. 24 2012 WL 2236752 (N.D. Cal 2012).. 8 25 Martinez v. Joe's Crab Shack Holdings, 231 Cal. App. 4th 362 (2014) 23 26 Morillion v. Royal Packing Co., 22 Cal. 4th 575 (2000) 13, 20 28 -11 - HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN 1 Payton v. Csi Electrical Contractors, Inc., 2 27 Cal. App. 5th 832 (2018) passim , Thurman v. Bayshore Transit Mgmt., Inc., 203 Cal. App. 4th 1112 (2012) 8 4 Villalpando v. Exel Direct Inc., 5 2015 WL 5179486 (N.D. Cal. Sept. 3, 2015) 7 6 Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338(2011) 4 7 Williams v. Superior Court, 8 3 Cal. 5th 531 (2017) 4,5, 17 9 Statutes 10 29 U.S.C. § 207(e)(3) 12, 23 11 29 U.S.C. § 207(e)(4) 6, 23 12 Business and Professions Code § 17200 21 13 Cal. Code Regs. 8, § 13520 (a) 7, 11 14 Labor Code § 203 7, 12 15 16 Labor Code § 2699(e)(1) and (2) ; 8 Ij Patient Protection and Affordable Care Act ; 8, 9,16,18 1g Other Authorities 19 29 C.F.R. § 778.208 10 20 29 C.F.R. § 778.211 23 21 29 C.F.R. § 778.215(a) 6 22 23 24 25 26 27 28 - Ill - HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN 1 I. INTRODUCTION 2 One thing Plaintiffs Tomas Arana ("Arana") and Andrea Spears' ("Spears") (collectively 3 "Plaintiffs") and Defendant Health Net of Califomia ("HNCA") agree upon is that Plaintiffs bear 4 the burden of proving each and every underlying Labor Code violation allegedly suffered by each 5 and every class member and allegedly aggrieved employee, and HNCA must be afforded the 6 opportunity to present its defenses to all the claimed violations. RA 358 (Opp. To December 21 7 Spears Motion) at 1:6-8, 8:16-19, citing Hibbs-Rines v. Seagate Techs., LLC, 2009 WL 513496, 8 at *4 (N.D. Cal. Mar. 2, 2009) ("Plaintiff will have to prove Labor Code violations with respect to 9 each and every individual on whose behalf plaintiff seeks to recover civil penalties imder 10 PAGA"). Moreover, it is Plaintiffs' burden to develop and present a Trial Presentation and 11 Management Plan ("Trial Plan") that will permit the fair, just, expeditious, and manageable 12 adjudication of the remaining claims in this lawsuit. See, e.g., Payton v. Csi Electrical 13 Contractors, Inc., 27 Cal. App. 5th 832, 843-45 (2018). Against this backdrop. Plaintiffs' trial 14 plan is at best folly, and at worst an effort to mislead this Court. RA 481 (Trial Plan).' That a 15 trial on the remaining claims involving 5,600 allegedly aggrieved employees could be completed 16 in four or five court days is nonsense. For example, to prove just one instance where one 17 individual would be entitled to recover for off-the-clock work. Plaintiffs will have to prove that 18 the individual was engaged in compensable work and that HNCA knew or should have known 19 that compensable work was being performed. RA 372 (HNCA's Opp. To Motion for Class Cert.) 20 at 16:20-25, citing Morillion v. Royal Packing Co., 22 Cal. 4th 575, 585 (2000). Multiply that 21 showing by 5,600 over what is now nearly a six-year recovery period and it is plain that trying 22 just this claim alone will take far longer than four or five days. 23 The proposed Trial Plan lacks the detail and rigor required to establish that Plaintiffs have 24 a plan to try the remaining issues in a manner that the law requires. See, e.g., Payton, 27 Cal. 25 2g ' Throughout this Opposition, citation to previous filings reference the Register of Actions ("RA") number. Citations to HNCA's Motion to Strike Arana's Representative PAGA Allegations ("Arana Motion to Strike") and Motion to 2y Strike Spears' Representative PAGA Allegations ("Spears Motion to Strike"),filedconcurrentiy herewith, reference the pages of the respective motions. All cited deposition exhibits and transcript pages and declaration not otherwise designated by RA number are attached as exhibits ("Ex.") to the Declaration of Tim Long ("Long Decl."), filed concurrently herewith. - 1- HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN 1 App. 5th at 843-45. (trial court properly rejected a proposed trial plan where the plan did not 2 contain any explanation of specific procedural tools to ensure it was valid and rigorous, nor any 3 basis for the fact-finder to move from quantities of data to conclusions about liability to class, and 4 did not show how individualized issues arisingfiromemployer's defenses could be managed). 5 Both the law and this Court's order require more than general statements conceming how 6 Plaintiffs intends to move forward. Id. For example, it is not enough to simply reference wage 7 statements, summary plan descriptions, and "6 witnesses (consisting of 2 Plaintiffs, 3 [of] 8 Defendant's Persons Most Knowledgeable, 1 expert damages witness" without any meaningful 9 discussion, (RA 481 (Trial Plan) at 7:6-7) when explaining how one intends to prove an off-the- 10 clock claim involving thousands of allegedly aggrieved employees. 11 The deficiencies of the Trial Plan are also exposed when one considers the renewed Arana 12 and Spears Motions to Strike HNCA has filed concurrently with these objections. HNCA will not 13 repeat those arguments here, but this brief should be read in conjimction with those motions. 14 Finally, the Trial Plan is also remarkable in two other respects. First, Plaintiffs are 15 essentially asking this Court to ignore that it did not certify the off-the-clock claim they propose 16 to try. RA 439 (August 30, 2019 Minute Order) at 4, 5-6; RA 481 at 0:16-1:14, 7:24-8:26. 17 Rather the Court certified a single question for class treatment. RA 439 at 4, 5-6 ("...[F]or the 18 difference between actual start and recorded start.. .there is an issue about the off the clock work 19 that can be resolved on a class wide basis: Did the time recording systems in effect during the 20 relevant periods prevent an accurate capture of the start time of the class members?... [EJxcept [as 21 to the resolution of this factual issue], ... the request to certify the off-the-clock claims is 22 denied.") Second, Plaintiffs are attempting to litigate two new PAGA claims: a Meal Period and 23 "EMPCenter" Claim never before presented in this case, including in their LWDA Notices. But 24 whether old, new, or made up. Plaintiffs have not articulated a Trial Plan that passes muster. 25 II. PROCEDURAL BACKGROUND 26 While Plaintiffs' Consolidated Complaint (RA 66), and their respective LWDA Notices^ 27 ^ RA 318 (Long Decl. ISO Motion as to Why Spears' Case Should Not Proceed as a PAGA Representative Action), 28 3, Ex. C, and RA 320 (Grimson Decl. ISO of Motion as to Why Arana's Case Should Not Proceed as a PAGA Representative Action), ^ 3, Ex. A. -2- HNCA'S OBJECTIONS TO PLAINTIFFS' TRLVL PLAN 1 mention a number of claims. Plaintiffs have clarified that they only intend to proceed with four: ^ 1. Miscalculation Claim. According to Plaintiffs, this claim "subsumes" the Miscalculation Class and PAGA claims. Plaintiffs claim that HNCA should have 3 included "MedFlxWave" payments, "DenFlxWave" payments, SPOT Awards, 4 ACA Incentive payments and/or Wellness Incentive payments in the regular rate when calculating overtime. Plaintiffs seek to recover unpaid overtime and PAGA 5 penalties, as \yell as wage statement and waiting-time penalties. RA 481 at 0:19-21, 0:26-1:7, 1:21-27, 6:5-7:4. 6 ^ 2. Off the Clock Claim. According to Plaintiffs, this claim "subsumes" an off the clock class claim and PAGA claims. Plaintiffs' theory of liability for this claim 8 is that HNCA failed to properly account for and/or record the hours worked by employees for all the time spent booting up their computers and logging in. 9 Plaintiffs seek to recover unpaid overtime and straight-time pay, PAGA penalties, as well as wage statement and waiting-time penalties. RA 481 at 1:21-27, 7:25- 10 8:26. 3. Meal Period Premium PAGA Claim. Plaintiffs'theory of liability for this j2 claim is that HNCA failed to advise the employees to use the pay code "DTO" for payment of meal period premiums, which resulted in numerous unpaid meal period 13 premiums between April 5, 2016 to December 31, 2016. Plaintiffs seek to recover meal period premiums, PAGA penalties, as well as wage statement and waiting- 14 time penalties. RA 481 at 1:21-27, 9:18-27. ^5 4. EMPCenter Timekeeping System Off the Clock PAGA Claim. The theory of liability for this claim is that HNCA failed to advise employees that they could manually enter their start and stop times in the EMPCenter timekeeping 17 system, which resulted in employees not being paid for all hours worked beginning January 1, 2017 to the present. Plaintiffs seek to recover unpaid overtime and 18 straight-time pay, PAGA penalties, as well as wage statement and waiting-time penalties. RA 481 at 1:21-27,11:9-22. 2Q All other claims set forth in Plaintiffs' Consolidated Complaint have otherwise been dismissed or abandoned ~ i.e.. Plaintiffs' rest break claims. RA 66, 481. 22 As pointed out in the companion Arana and Spears Motions to Strike, each one of these 23 claims is unmanageable, and the Trial Plan only imderscores this conclusion. It also bears 24 repeating that the Court declined to certify the off the clock claim (Claim No. 2) Plaintiffs are 25 seeking to pursue. Rather, the Court only certified a single issue, and Plaintiffs fail to mention 2g that issue in their Trial Plan. Finally, Plaintiffs' third and fourth claims should be stricken for a 2^ number of reasons, not the least of which is that they failed to exhaust the administrative process 2g before trying to pursue these claims in court at this late date. -3- . HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN 1 HNCA will discuss each claim below, summarizing its objections to the proposed 2 Plaintiffs' plan (such as it is) to try each claim. HNCA will also provide a reality check as to each 3 claim, which will demonstrate that the Trial Plan is wholly deficient - and should lead this Court 4 to strike all the claims remaining in this case. Finally, HNCA will provide its responses to the 5 questions the Court has asked the parties to answer. 6 III. ARGUMENT 7 Recovery under the PAGA is predicated on a plaintiff first establishing that the defendant 8 violated the Labor Code. See Arias v. Superior Court, 46 Cal. 4tii 969, 987 (2009). Critically, in 9 order to prevail on PAGA claims, plaintiffs must prove each and every violation with regard to 10 each and every allegedly aggrieved employee on whose behalf they seek to recover PAGA 11 penalties. RA 358 (Oppo. to December 21 Spears Mtn.) at 8:12-28, 9:1-2, citing Zayers v. 12 Kiewit Infrastructure W. Co., 2017 WL 7058141, at *8 (CD. Cal. Nov. 9, 2017), and Hibbs- 13 Rines, 2009 WL 513496, at *4. Thus, Plaintiffs must prove each alleged Labor Code violation not 14 only for themselves but for each allegedly aggrieved employee that the Plaintiffs purportedly 15 represent. See Williams v. Superior Court, 3 Cal. 5th 531, 547-48 (2017), citing Sakkab v. 16 Luxottica Retail NAm., Inc., 802 F.3d 425, 438 (9th Cir. 2015). Moreover, HNCA is entitied to 17 challenge each and every one of the more than 5,600 allegedly aggrieved employees' right to 18 recovery. Both the United States and Califomia Supreme Courts recognize HNCA's due process 19 right to do so. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 366 (2011); Duran v. U.S Bank 20 Nat'lAss'n, 59 Cai. 4ih 1,29 (2014). 21 In proving each PAGA claim. Plaintiffs must also explain to the Court how they will do 22 so efficientiy and in a manner that is manageable - z. e., without a trial devolving into thousands 23 of mini-trials and individualized disputes. Plaintiffs bear the burden of demonstrating 24 manageability. See, e.g., Payton, 27 Cal. App. 5 that 843-45 (trial court properly rejected a 25 proposed trial plan where the plan did not contain any explanation of specific procedural tools to 26 ensure it was valid and rigorous, nor any basis for the fact-finder to move from quantities of data 27 to conclusions about liability to class, and did not show how individualized issues arising from 28 employer's defenses could be managed). The Califomia Supreme Court recently confirmed this -4- HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN 1 requirement, when it discussed how a plaintiff bringing a PAGA representative action must "seek 2 to render trial of the action manageable." Williams, 3 Cal. 5th at 559. 3 As set forth below. Plaintiffs fail to demonstrate in their Trial Plan how any of their claims 4 can be tried in a manageable fashion. 5 A. The Trial Plan Fails To Take Into Consideration The Nuances Of The Miscalculation Claim 6 This claim is actually comprised of five separate claims: 7 „ Was HNCA required to include the "MedFlxWave" payment in the regular rate when 8 calculating overtime? 9 • Was HNCA required to include the "DenFlxWave" payment in the regular rate 3. when calculating overtime? 10 Was HNCA required to include "ACA Incentive Payments" in the regular rate when 11 calculating overtime? 12 • Was HNCA required to include "SPOT Awards" in the regular rate when calculating overtime? 13 Was HNCA required to include "Wellness Incentive Payments" in the regular rate when 14 calculating overtime? 15 The first two claims are related. The others are not, and each involves separate factual 16 imderpinnings. As a result, the testimony and documentary evidence conceming these claims, not 17 to mention evidence supporting Plamtiffs' alleged wage losses and right to recover penalties, will 18 be distinct and complex. 19 1. The Trial of The MedFlxWave And DenFlxWave Payments WiU Involve A Potentially Complex Presentation Of Evidence Requiring The Interpretation Of 20 A Multi-pronged Regulation 21 The first two claims conceming MedFlxWave and DenFlxWave payments involve 22 payments that HNCA employees received pursuant to a cafeteria benefits plan that was in effect 23 prior to January 1, 2017. If an employee waived their right to medical or dental benefits 24 (because, for example, they were covered tmder a spouse's plan), then the employees would 25 receive a small payment firom the plan, a $20 MedFlxWave payment every pay period and/or a $6 26 DenFlx Wave Payment every pay period. RA 103 (Rodes Deck, ^ 7; Colia Deck, TITj 10, 11, Exs. 27 A-I). Whether HNCA was required to include these payments in the regular rate when 28 calculating overtime depends on the application of what is known as the Cash Benefit-Plan -5- HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN 1 Contiibution Exemption ("Cash Benefit Exemption"). See 29 U.S.C. § 207(e)(4). Under tiiis 2 exemption, if the following five elements are satisfied, then HNCA was not required to include 3 the MedFlxWave and DenFlxWave payments in the regular rate. Those five elements are: 4 (1) The contributions must be made pursuant to a specific plan or program adopted by the 5 employer . . . and communicated to tiie employees. This may be either a company- financed plan or an employer-employee contributory plan. 6 (2) The primary purpose of the plan must be to provide systematically for the payment of 1 benefits to employees on account of death, disability, advanced age, retirement^ illness, ^ medical expenses, hospitalization, and the like. (3) In a plan or tmst... [t]he benefits must be specified or definitely determinable on an 9 actuarial basis . . . . 10 (4) The employer's contributions must be paid irrevocably to a trustee or third person pursuant to an insurance agreement, tmst or other funded arrangement. The tmstee must 11 assume the usual fiduciary responsibilities imposed upon tmstees by applicable law. The tmst or fimd must be set up in such a way that in no event will the employer be able to 12 recapture any of the contributions paid in nor in any way divert the fiinds to his own use or benefit.... 13 (5) The plan must not give an employee the right to assign his benefits tmder the plan nor 14 the option to receive any part of the employer's contributions in cash instead of the benefits under the plan: Provided, however. That if a plan otherwise qualified as a bona 15 fide benefit plan under section 7(e)(4) of the Act, it will still be regarded as a bona fide plan even though it provides, as an incidental part thereof, for the payment to an employee 16 in cash of all or a part of the amount standing to his credit... during the course of his employment under circumstances specified in the plan and not inconsistent with the 17 general purposes of the plan to provide the benefits described in section 7(e)(4) of the Act. 18 19 29 C.F.R. § 778.215(a); see also RA 282 (Renewed MSA) at 15:3-28. HNCA contends tiiat tiie 20 Cash Benefit Exemption applies and that it was not required to include the MedFlxWave and 21 DenFlxWave payments in the regular rate. 22 To resolve these two claims, the Court will first have to consider live testimony from a 23 number of witnesses, most of whom Plaintiffs have not deposed, who will testify conceming the 24 stmcture of the cafeteria benefit plan at issue, including potentially relevant amendments to that 25 plan. HNCA witnesses will also testify conceming the administration of that cafeteria benefits 26 plan. Finally, HNCA witnesses will testify conceming how these payments were made, which 27 will include testimony conceming the payroll system in place at the time. This evidentiary 28 showing will be comprised of lay and expert witnesses, as well as substantial documentary -6- HNCA'S OBJECTIONS TO PLAINTIFFS' TRLVL PLAN 1 evidence.^ At this time, HNCA estimates that it will present up to ten witnesses on these two 2 claims alone. 3 Assuming the Court were to find that the Cash Benefit Exemption does not apply, the 4 Court will have to consider testimony conceming the alleged wage loss and the penalties 5 Plaintiffs seek to recover. As to wage loss, this will require a pay-period-by-pay-period analysis 6 of each wage statement for each employee to determine who received a MedFlxWave and/or 7 DenFlxWave payment, and whether the employee was entitied to overtime. This effort will be 8 further complicated because while pay periods are be-weekly, overtime must be determined on a 9 daily and weekly basis for each employee who received either a MedFlxWave and/or 10 DenFlxWave payment. Only then can one calculate whether there has been a wage loss. This 11 will be complex and time-consuming. 12 Plaintiffs report that they will provide testimony from an undisclosed damages expert (RA 13 481 (Trial Plan) at 7:7), but they fail to explain the nature of this testimony or the methodology 14 their expert will use. ^ HNCA and the Court are only left to guess. Up to this point in the 15 litigation. Plaintiffs have not designated an expert for these claims, or provided any expert 16 analysis of these claims. While Plaintiffs were required to discuss specifically how these claims 17 would be tiied {See Payton, 27 Cal. App. 5* at 843-45) tiiey have failed to do so. 18 For its part, HNCA will present live testimony from at least one expert on the alleged 19 wage loss and penalties Plaintiffs are seeking. In addition, HNCA will introduce testimony 20 targeting the right to recover some or all of the penalties Plaintiffs seek to recover. For example, 21 whether Plaintiffs will be entitled to recover waiting-time penalties under Labor Code section 203 22 will depend on whether HNCA proves up its good faith defense to such penalties. See Cal. Code 23 of Regs. tit. 8, §13250; see also Villalpando v. Exel Direct Inc., 2015 WL 5179486, at *36 (N.D. 24 Cal. Sept. 3, 2015). That defense will require the Court to consider whether there is a "good faith 25 dispute" that any .wages are due. Cal. Code Regs. tit. 8, § 13520 (a); see also Barnhill v. Robert 26 27 ^ HNCA proposes that any trial on these claims be bifurcated between liability and damages. If the Cash Benefit Exemption applies, then there is no wage loss or right to penalties. 28 ^ And if Plaintiffs try to rely upon expert testimony akin to the expert testimony they submitted in their failed attempt at class certification, HNCA will no doubtfilea Daubert-Vikt motion challenging Plaintiffs' expert. -7- HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN 1 Saunders & Co., 125 Cal. App. 3d 1, 8 (1981). As for the PAGA penalties Plaintiffs are seeking, 2 HNCA will offer testimony based on which the Court will exercise its equitable powers in 3 determining what amount of PAGA penalties to award. Labor Code § 2699(e)(1) and (2) (when a 4 civil penalty is imposed under PAGA, the Court has the discretion to set the amount, taking into 5 consideration all "facts and circumstances of the particular case" to avoid "an award that is 6 unjust, arbitrary and oppressive, or confiscatory"); Thurman v. Bayshore Transit Mgmt, Inc., 203 7 Cal. App. 4th 1112, 1136 (2012) (a reduction of PAGA penalties is appropriate when the 8 employer had taken its obligations seriously and attempted to comply with the law); Amaral v. 9 Cintas Corp. No. 2 163 Cal. App. 4th 1157, 1214 (2008) (an important consideration is whether 10 the penalty is proportionate to the employer's misconduct); Cotter v. Lyft, Inc., 193 F. Supp. 3d 11 1030, 1037 (N.D. Cal. 2016) (indicating tiiat a "substantial" reduction would likely be in order 12 since, among other things, the company's "obligations ... are genuinely unclear"); Li v. A Perfect 13 Day Franchise, Inc. 2012 WL 2236752 * 17 (N.D. Cal 2012) (considering duplicity when 14 imposing penalties).^ The testimony conceming these alleged penalties will necessarily be 15 focused on the underlying MedFlxWave and DenFlxWave claims, and will be distinct from other 16 testimony focusing on Plaintiffs' right to recover penalties for other alleged claims. 17 Plaintiffs' Trial Plan does not take into accoimt any of the details associated with this 18 claim and certainly doesn't propose an efficient process for adjudicating the issue of exemption, 19 as well as the determination of wage loss and penalties. When considered along with the other 20 claims. Plaintiffs seek to try, and then completely associated with just these two claims, it should 21 be apparent that Plaintiffs'Trial Plan is deficient. 2. HNCA Included ACA Incentive Payments In The Regular Rate 23 Before January 1, 2017, a number of HNCA employees eamed ACA Incentive Payments when they voluntarily worked overtime due to an increase in their workloads caused by the 25 implementation of the Patient Protection and Affordable Care Act. RA 103 (Rodes Deck, ^ 19, 26 27 ^ As discussed fiirther below, if there is a fmding of liability on any of the other claims Plaintiffs seek to try, HNCA will also be entitied to introduce similar evidence in its defense against Plaintiffs' efforts to seek similar penalties. 28 Such evidence will be particular to each unique claim upon which liability is found. HNCA proposes that for each claim, the trial should be bifurcated as to liability and damages (wage loss and/or penalties). -8- HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN 1 Ex. F.) Specifically, under the ACA Incentive Plan, eligible employees who worked a certain 2 number of overtime hours each month received bonus payments. Id. These payments were 3 included in recipients' regular rate of pay. RA 103 (Rodes Deck, 20-21, Ex. G); see also RA 4 101 (MSA) at 5:8-15. At this jtmcture HNCA estimates that hundreds of individuals eamed ACA 5 Incentive Payments. 6 As Plaintiffs should know by now, HNCA included these payments in the regular rate 7 when it calculated overtime. RA 103 (Rodes Deck, 19-21, Exs. F,G.) Assuming that Plaintiffs 8 go forward with this claim, HNCA will present witness testimony conceming the ACA Incentive 9 Payments themselves, the criteria for eaming the ACA Incentive Payments, when the ACA 10 Incentive Payments were provided and the accoimting of the ACA Incentive Payments for each 11 pay period and for each employee who eamed the ACA Incentive Payments to prove that the 12 ACA Incentive Payments were included in the regular rate. This will involve a number of 13 witnesses and require a pay-period-by-pay-period analysis of each wage statement for each 14 employee who eamed an ACA Incentive Payment. As with the MedFlxWave and DenFlxWave 15 claims, this analysis is fiirther complicated because one has to break down the bi-weekly wage 16 statements in daily and weekly components to determine whether (and when) overtime was 17 worked and to confirm that the overtime was properly calculated to include these payments. 18 HNCA will not be presenting this testimony on a representative or survey basis. 19 Plaintiffs' Trial Plan ignores all of the complexities, as well as, HNCA's due process right 20 to present witnesses and documentary evidence necessary to prove its defense, i.e. that this 21 payment was included in the regular rate of pay for each allegedly aggrieved employee for each 22 workweek at issue. A more efficient process for trying this claim does not exist. The process is 23 interestingly individualized and time-consuming. 3. The Determination of Whether SPOT Awards Were Discretionary Bonuses That 25 Did Not Need To Be Included In The Regular Rate Will Require Individualized Analyses 26 Significant manageability issues exist in connection with a trial of the SPOT Award 27 Claim. While HNCA moved for summary adjudication of this claim as to each Plaintiff, the court 28 -9- HNCA'S OBJECTIONS TO PLAINTIFFS' TRLVL PLAN 1 considered tiiey wereti-iableissues of fact. RA 272 (October 23, 2018 Minute Order); RA 374 2 (Febmary 26, 2019). Taking that guidance from the Court, it is apparent that the Court implicitly 3 agrees that this claim will require fact-specific and individualized determinations, involving each 4 and every SPOT Award recipient. Yet Plaintiffs Trial Plan does not accoimt for any ofthe 5 complexities. 6 The crux of this claim involves determining whether each SPOT Award payment was a 7 discretionary bonus. If a Spot Award payment was discretionary, it would not be included in the 8 regular rate and Plaintiffs' claim would fail as to that SPOT Award recipient. 29 C.F.R. § 9 778.208. See also Bowers v. First Student, Inc., 2015 WL 186914 at *3-4 (CD. Cal 2015). And 10 as evidence by the mechanics of the SPOT Award process, this determination will have to be 11 made for each and every SPOT Award, each and every time it will be paid out. 12 SPOT Awards were paid when an employee "demonsfrate[d] exceptional behavior on the 13 job . . . whether it [wa]s within or beyond [the employee's] job scope." RA 103 (Rodes Deck, ^ 14 13, Ex. C.) Employees were aware that bonuses were awarded without any promise or incentive 15 being announced beforehand. Id. Indeed, there were no pre-estabHshed criteria for awarding 16 SPOT bonuses or pre-established amounts to be awarded. RA 103 (Rodes Deck, 1}^ 13-14, Ex. 17 C.) Rather, the decision of when, for what reason, and in what amount to award a SPOT bonus - 18 within a range - was subject to the discretion of managers and fhe ultimate approval of the head of 19 tiie appropriate Business Unit. RA 103 (Rodes Deck, 13-17, Exs. C, D.) Deck, Procedurally, 20 a SPOT bonus was initiated if a manager felt that an employee on his or her team should receive 21 one. RA 103 (Rodes Deck, 13, 16, Ex. C.) The manager had the discretion to complete the 22 SPOT Award Nomination Form detailing the reason for nomination, describing the achievement, 23 and identifying a specific amount he or she believed appropriate. RA 103 (Rodes Deck, 13-14, 24 16, Exs. C, D.) The manager would then submit the form to the head of his or her Business Unit. 25 . JRA 103 (Rodes Deck, ^ 16.) The Business Unit Leader then exercised his or her discretion as to 26 whether to award the SPOT bonus based on the manager's recommendation (or not) and, if so, in 27 what amount. RA 103 (Rodes Deck, ^ 17.) These were, therefore, two levels of decision-making 28 the Court will have to evaluate each time a SPOT Award payment was made. SPOT bonuses - 10- HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN 1 were not included in recipients' regular rate calculation. RA 103 (Rodes Deck, Tf^f 17-18, Ex. E.) 2 Obviously, Plaintiffs believe that the SPOT Awards were in fact non-discretionary bonuses and 3 should have been included in the regular rate. 4 During a trial on this claim, the parties will have to litigate each and every SPOT Award 5 granted in order to establish the nature of each and every award payment - i.e., that in fact each 6 SPOT Award was granted on a discretionary basis. This will necessarily include testimony from 7 many witnesses because HNCA estimates that hundreds, if not thousands, of SPOT Awards were 8 granted during the class period. This evidence will necessarily include the factors that each and 9 every manager who granted such an award considered when making a SPOT Award, when the 10 SPOT Awards were provided and the accounting ofthe SPOT Awards for each and every 11 applicable pay period and for each and every employee who eamed the SPOT Awards. 12 The inquiry will not end there. As pointed out above, if the Courtfindsthat any SPOT 13 Award will in fact be a non-discretionary payment, the Court will then tum its attention to the 14 wage loss and penalties Plaintiffs are seeking HNCA must then be permitted to infroduce 15 evidence that the amount of penalties being sought should be small (in the case of PAGA 16 penalties) and/or not awarded because HNCA acted in good faith (in the case of waiting-time 17 penalties). The latter showing will necessarily involve testimony conceming each SPOT Award 18 granted to demonsfrate that HNCA had a good faith basis for believing that the SPOT Award was 19 discretionary. See Cal. Code Regs. tit. 8, § 13520 (a); see also discussion infra § III.A.l. above. 20 Needless to say, this evidentiary showing will be lengthy, fact-intensive, and individualized. 21 And as with the other claims. Plaintiffs Trial Plan does not account for the nuances of this 22 claim, including offering an expeditious and manageable plan for trying the issues associated with 23 this claim. Presumably, this is because Plaintiffs implicitly concede that the issues associated 24 with this claim are individualized and unmanageable, particularly when considered with the other 25 claims Plaintiffs seek to try. 26 4. "Wellness Incentive Payments" Did Not Need to be Included in The Regular Rate 27 Prior to January 1, 2017, HNCA provided Wellness Incentive Payments to employees for 28 participating in a health club and/or weight management program. Because these were not -11- HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN 1 payments designed to compensate employees for hours worked, they were excludable from the 2 regular rate.^ See 29 U.S.C. § 207(e)(3). 3 If this claim goes to trial, HNCA will present witness testimony conceming the purpose of 4 the Wellness Incentive policy and payment program. Under this program, employees had to 5 submit evidence that they qualified for these payments. Therefore, the parties will necessarily 6 need to evaluate whether each and every recipient actually qualified for this payment.^ 7 If the Court were to determine that the Wellness Incentive Payment should have been 8 included in the regular rate when calculating overtime, the analysis will then turn to proving wage 9 loss and a basis for recovering PAGA penalties and the other derivative penalties, including 10 waiting-time penalties under Labor Code section 203. As with the other claims that comprise this 11 Miscalculation Claim, this testimony will be a mix of expert and lay witness testimony, and will 12 necessarily involve a payment-by-payment analysis, on a pay period-by-pay period, employee- 13 by-employee basis. There is simply no way around working through fact-intensive and 14 individualized nature of this claim. Certainly, Plaintiffs have not offered any. 15 B. The Court Should Reject Plaintiffs' Attempt to Resurrect Their Off The Clock Claim. Which The Court Refused to Certify 16 In their Trial Plan, Plaintiffs propose trying an off-the-clock class claim in addition to an 17 off-the-clock PAGA claim. RA 481 (Trial Plan) at 7:25-26. However, and as the Court knows, it 18 refiised to certify Plaintiffs' requested Off the Clock Claims, with a limited exception of an issue 19 class, which was linked to a single question. RA 439 (August 30, 2019 Minute Order). The Court 20 mled in relevant part as follows: 21 ...[T]he Court does not find a well-defmed community of interest on each [of 22 Plaintiffs' off-the clock work, rneal periods and rest periods] claim[s], because it 23 carmot be found on this record that the issues which may be jointiy tried on each claim, when compared with those appearing by the evidence to require separate 24 individualized adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to putative class. 25 26 ^ In light of new federal Department of Labor ("DOL") regulations that came into effect earlier this year, HNCA 27 intends to file a motion for summary adjudication as to this claim. ' Interestingly, neither Plaintiff received one of these payments, so they are not competent to present any evidence as 28 to this claim. This is in part why HNCA has challenged Plaintiffs' right to recover PAGA penalties based on this claim. -12- HNCA'S OBJECTIONS TO PLAINTIFFS' TRIAL PLAN 1 RA 439 at 4. The Court then sua sponte certified the following issue for class treatment: "[d]id 2 the time recording system in effect during the relevant periods prevent an accurate capture of the 3 starttimeof the class members?" RA 439 at pp. 5-6. Plaintiffs apparentiy forgot about this mling 4 when designing their Trial Plan, including failing to mention how they propose to try this one 5 issue identified by the Court for class treatment. 6 For its part, HNCA intends to file a motion for summary adjudication on this issue. 7 Should for some reason that motion not be granted, HNCA will move to decertify it. The reason 8 that summary adjudication is warranted is because the answer to the question is "No¥es." 9 Indeed, there is ample undisputed evidence in the record leading to this conclusion. In the 10 altemative, HNCA will move to decertify the claim. ^ 11 Should this issue proceed to trial on a certified basis notwithstanding HNCA's motions, 12 any trial on this claim will undoubtedly devolve into a myriad of individualized issues. This is 13 because how the timekeeping system functioned begins then quits as to whether any class 14 member will be engaging in off-the-clock work and whether HNCA was obligated to pay for that 15 work. If the applicable time recording system in effect during the relevant period prevented an 16 accurate capture of the start time of the class members (which it did not). Plaintiffs will still be 17 required to come forward with evidence to prove that in each instance when off-the-clock work is 18 claimed, each class member was engaged in compensable work. Morillion, 22 Cal. 4th at 585. 19 Plaintiffs will then need to prove that in each instance, HNCA knew or should have known that 20 the class members were engaged in compensable work. Id. Whether the off-clock claim is 21 stylized as the class claim Plaintiffs now seek to pursue, on that is pursued after thefimctioningof 22 the timekeeping system is finally confirmed, or as a PAGA claim, there should be no doubt that 23 the trial on this issue will breakdown into thousands of individualized mini-trials.^ 24 25 26 8 From a procedural perspective the certified issue presents an interesting legal question. Plaintiffs did not move to certify this issue and did not even mention it in their certification papers. It was the Court that crafted this issue, and 27 then certified it. The Court did so without affording HNCA the opportunity to brief the issue. There should be no procedural bar to HNCA demonstrating why this question should not have been certified in the first instance. 28 ' And for this reason the Court refused to certify the off-the-clock claim the Plaintiffs tried to certify in the first instance. - 13 - HNCA'S OBJECTIONS TO PLAINTIFFS' TRLVL PLAN 1 Consider for example Plaintiffs PAGA claims and what Plaintiffs will have to prove to 2 recover PAGA penalties. For the employees working in call centers and they represent only one 3 segment of the employees whom Plaintiffs are seeking to prove worked off the clock, there are 4 potentially significant factual differences that would impact whether employees ever worked off 5 the clock, under what circumstances such work occurred, and whether HNCA had reason to know 6 that work occurred. RA 329 (Rodes Deck, |6; RA 325 (Summary of Evidence - Factual 7 Statement ("FS"), 1). As the Court knows, one of Plaintiffs' theories of recovery is that 8 employees experienced delays when logging into their computers. However, many call center 9 employees experienced virtually no delays with their log-in process, and thus did not work off- 10 the-clock as the result of supposed log-in delays. RA 325 (FS 10). By confrast, Maria Castaneda, 11 who works as a Concurrent Review Lead in the Concurrent Review Unit of the Medical 12 Management Department in Woodland Hills, has reported a different experience. RA 317, Tab 8 13 (Decl. of Maria Castaneda ^ 1). It takes Ms. Castaneda a matter of seconds to open and close her 14 computer program; likewise, the process for her to record her time in the web-based EMPCenter 15 program takes mere seconds. M 8, 18. Tracy Raitt, a Project Coordinator in the Case 16 Management Department in Woodland Hills, reports that it takes here a few minutes to log out of 17 the system. RA 317, Tab 32 (Declaration of Tract Raitt | ^ 1,18). Ms. Raitt previously manually 18 recorded her time, and now uses an elecfronic system to do so. Id. 16,17. Yet regardless of 19 which system she has used tofrackher time, Ms. Raitt never worked off the clock or worked 20 hours she has not reported. Id.\\9. 21 The resolution of these issues as to one individual employee in no way represents or could 22 be exfrapolated to the experience of any other employee. During the relevant time period, 23 employees worked in approximately 352 different job titles, at 26 different locations, under 24 approximately 526 different managers. RA 329 (Rodes Decl.) 5. For Plaintiffs to meet their 25 burden of proving each individual off-the-clock violation for which they seek penalties under the 26 PAGA, the Court would have to conduct mini-trials for all 5,600 employees to determine whether 27 and when that particular employee worked off the clock, as well as whether management had 28 reason to know that employee had worked without pay. Thus, not only is the proof necessary to -14- HNCA'S OBJECTIONS TO PLAINTIFFS' TRL\L PLAN 1 establish that the allegedly aggrieved employees worked off-the-clock highly individualized but 2 establishing HNCA's liability for this claim necessarily involves complex factual issues and poses 3 significant manage